Correlation Between Sony Group and Swatch
Can any of the company-specific risk be diversified away by investing in both Sony Group and Swatch at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sony Group and Swatch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group Corp and The Swatch Group, you can compare the effects of market volatilities on Sony Group and Swatch and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sony Group with a short position of Swatch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Group and Swatch.
Diversification Opportunities for Sony Group and Swatch
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sony and Swatch is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group Corp and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group and Sony Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sony Group Corp are associated (or correlated) with Swatch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of Sony Group i.e., Sony Group and Swatch go up and down completely randomly.
Pair Corralation between Sony Group and Swatch
Assuming the 90 days trading horizon Sony Group Corp is expected to generate 0.59 times more return on investment than Swatch. However, Sony Group Corp is 1.71 times less risky than Swatch. It trades about 0.1 of its potential returns per unit of risk. The Swatch Group is currently generating about 0.01 per unit of risk. If you would invest 1,888 in Sony Group Corp on October 28, 2024 and sell it today you would earn a total of 111.00 from holding Sony Group Corp or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Sony Group Corp vs. The Swatch Group
Performance |
| Timeline |
| Sony Group Corp |
| Swatch Group |
Sony Group and Swatch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony Group and Swatch
The main advantage of trading using opposite Sony Group and Swatch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony Group position performs unexpectedly, Swatch can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Swatch will offset losses from the drop in Swatch's long position.| Sony Group vs. Magic Software Enterprises | Sony Group vs. DeVry Education Group | Sony Group vs. Guidewire Software | Sony Group vs. Strategic Education |
| Swatch vs. BRIT AMER TOBACCO | Swatch vs. NORTHEAST UTILITIES | Swatch vs. United Utilities Group | Swatch vs. Constellation Software |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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